10. COMMON STOCK AND STOCK PLANS

Common Stock

We have two classes of stock; Class A and Class B Common Stock. Both classes of stock participate equally in dividends. Holders of Class B are entitled to one vote per share and to elect as a class 75% of the Board of Directors, rounded down to the nearest whole number. Holders of Class A Common Stock are entitled to one-tenth of a vote per share and to elect as a class 25% of the Board of Directors, rounded up to the nearest whole number.

Class B Common Stock is convertible at the option of the holder into Class A Common Stock on a share‑for‑share basis. During 2015, 154,000 Class B Common Shares were converted to Class A Common Shares at the request of a holder.

The holders of shares of Class B Common Stock are parties to an agreement, the intent of which is to preserve control of the Company by the McClatchy family. Under the terms of the agreement, the Class B shareholders have agreed to restrict the transfer of any shares of Class B Common Stock to one or more “Permitted Transferees,” subject to certain exceptions. A “Permitted Transferee” is any of our current holders of shares of Class B Common Stock; any lineal descendant of Charles K. McClatchy (1858 to 1936); or a trust for the exclusive benefit of, or in which all of the remainder beneficial interests are owned by, one or more lineal descendants of Charles K. McClatchy.

Generally, Class B shares can be converted into shares of Class A Common Stock and then transferred freely (unless, following conversion, the outstanding shares of Class B Common Stock would constitute less than 25% of the total number of all our outstanding shares of common stock). In the event that a Class B shareholder attempts to transfer any shares of Class B Common Stock in violation of the agreement, or upon the happening of certain other events enumerated in the agreement as “Option Events,” each of the remaining Class B shareholders has an option to purchase a percentage of the total number of shares of Class B Common Stock proposed to be transferred equal to such remaining Class B shareholder’s ownership percentage of the total number of outstanding shares of Class B Common Stock. If all the shares proposed to be transferred are not purchased by the remaining Class B shareholders, we have the option of purchasing the remaining shares. The agreement can be terminated by the vote of the holders of 80% of the outstanding shares of Class B Common Stock who are subject to the agreement. The agreement will terminate on September 17, 2047, unless terminated earlier in accordance with its terms.

In April 2015, our Board of Directors authorized a new share repurchase program for the repurchase of up to $7.0 million of our Class A Common Stock through December 31, 2016. This program was further amended in August 2015 to authorize a total of up to $15.0 million to repurchase shares. The shares are to be repurchased from time to time depending on prevailing market prices, availability, and market conditions, among other factors. As of December 27, 2015, we have repurchased approximately 6.1 million shares at a weighted average price of $1.28 per share, or $7.8 million of the total buyback approved.

Stock Plans

During 2015, we had two stock‑based compensation plans, which are described below.

We have a stock incentive plan (the “2004 Plan”) that reserved 9,000,000 Class A Common shares for issuance to key employees and outside directors. The options vested in installments over four years, and once vested are exercisable up to 10 years from the date of grant. In addition, the 2004 Plan permitted the following type of incentive awards in addition to common stock, stock options and stock appreciation rights (“SARs”): restricted stock, unrestricted stock, stock units and dividend equivalent rights. The 2004 Plan was frozen in May 2012.

In May 2012 the shareholders approved The McClatchy Company 2012 Omnibus Incentive Plan (“2012 Plan”) to replace the 2004 Plan, for all future awards. The 2012 Plan provided that the Class A Common Stock available for issuance equal to 5,000,000 shares plus the number of shares available for future awards under the 2004 Plan as of the date of May 16, 2012 (the shareholder meeting date) plus the number of shares subject to awards outstanding under the 2004 Plan as of May 16, 2012, which terminate by expiration, forfeiture, cancellation or otherwise without the issuance of such shares. The 2012 Plan generally provides for granting of stock options or SARs only at an exercise price at least equal to fair market value on the grant date; a 10-year maximum term for stock options and SARs; no repricing of stock options or SARs without prior shareholder approval; and no reload or “evergreen” share replenishment features.

Stock Plans Activity

In both 2015 and 2014, we granted 15,000 shares of Class A Common Stock to each non‑employee director, resulting in the issuance of 150,000 shares from the 2012 Plan in each year. In 2013, we granted 15,000 shares of Class A Common Stock to each non-employee director, resulting in the issuance of 165,000 shares from the 2012 Plan.

We granted restricted stock units (“RSUs”) at fair market value on the date of grant to certain key employees from the 2012 Plan as summarized below. The RSUs generally vest three years after grant date but terms of each grant are at the discretion of the compensation committee of the board of directors.

The following table summarizes the RSUs stock activity:


		Weighted
		Average Grant
		Date Fair
	RSUs	Value
Nonvested — December 30, 2012	1,102,000	$	2.98
Granted	483,150	$	2.46
Vested	(320,000)	$	4.08
Forfeited	(33,500)	$	2.48
Nonvested — December 29, 2013	1,231,650	$	2.50
Granted	856,950	$	4.61
Vested	(717,150)	$	2.92
Forfeited	(41,900)	$	2.93
Nonvested — December 28, 2014	1,329,550	$	3.62
Granted	1,365,300	$	2.28
Vested	(970,000)	$	2.85
Forfeited	(186,050)	$	3.08
Nonvested — December 27, 2015	1,538,800	$	2.98

As of December 27, 2015, the total fair value of the RSUs that vested during the period was $1.6 million. As of December 27, 2015, there were $3.0 million of unrecognized compensation costs for nonvested RSUs, which are expected to be recognized over 1.8 years.

When SARs are granted they are granted at fair market value on the date of grant to certain key employees from the 2012 Plan. The SARs generally vest four years after grant date but terms of each grant is at the discretion of the compensation committee of the board of directors.

Outstanding options and SARs are summarized as follows:


		Weighted		Aggregate
		Average		Intrinsic Value
	SARs	Exercise Price		(in thousands)
Outstanding December 30, 2012	6,194,500	$	11.45	$	1,846
Granted	775,000	$	2.46
Exercised	(545,750)	$	1.72	$	847
Forfeited	(58,500)	$	3.30
Expired	(254,750)	$	48.97
Outstanding December 29, 2013	6,110,500	$	9.69	$	2,384
Exercised	(1,678,250)	$	2.86	$	3,138
Forfeited	(67,250)	$	3.38
Expired	(516,250)	$	35.74
Outstanding December 28, 2014	3,848,750	$	9.28	$	1,542
Forfeited	(68,750)	$	2.61
Expired	(578,750)	$	20.76
Outstanding December 27, 2015	3,201,250	$	7.35	$	—
Vested and Expected to Vest December 27, 2015	3,179,366	$	8.09	$	—
Options exercisable:
December 29, 2013	3,983,875			$	1,306
December 28, 2014	2,719,750			$	716
December 27, 2015	2,774,125			$	—

As of December 27, 2015, there were $0.3 million of unrecognized compensation costs related to options and SARs granted under our plans. The cost is expected to be recognized over a weighted average period of 1.1 years.

The following tables summarize information about stock options and SARs outstanding in the stock plans at December 27, 2015:


		Average
		Remaining	Weighted			Weighted
Range of Exercise	Options/SARs	Contractual	Average		Options/SARs	Average
Prices	Outstanding	Life	Exercise Price		Exercisable	Exercise Price
$1.70 – $9.07	2,426,250	4.70	$	3.06	1,999,125	$	3.17
$9.73 – $35.94	574,000	1.91	$	13.17	574,000	$	13.17
$40.95 – $73.36	201,000	0.92	$	42.48	201,000	$	42.48
Total	3,201,250	3.96	$	7.35	2,774,125	$	8.09

The weighted average remaining contractual life of options exercisable at December 27, 2015, was 3.5 years. The weighted average remaining contractual life of options vested and expected to vest at December 27, 2015, was 3.5 years.

The fair value of the stock options and SARs granted in 2013 were estimated on the date of grant using a Black‑Scholes option valuation model that used the assumptions noted in the following table. The expected life of the options represents the period of time that options granted were expected to be outstanding using the historical exercise behavior of employees. The expected dividend yield was based on historical dividends declared per year, giving consideration for any anticipated change and the estimated stock price over the expected life of the options based on historical experience. Expected volatility was based on historical volatility for a period equal to the stock option’s expected life for shares granted. The risk‑free rate for periods within the contractual life of the option was based on the U.S. Treasury yield curve in effect at the time of grant. We did not grant any SARs in 2015 or 2014.


	2013
Expected life in years		4.51
Dividend yield		NIL
Volatility		1.08
Risk-free interest rate		0.76	%
Weighted average exercise price of options/SARs granted	$	2.46
Weighted average fair value of options/SARs granted	$	1.85

Stock‑Based Compensation

Total stock‑based compensation expense consisted of the following:


	Years Ended
	December 27,		December 29,		December 29,
(in thousands)	2015		2014		2013
Stock-based compensation expense	$	3,178	$	3,479	$	3,481